Landlord and Tenant Act 1954 – review of business tenancy renewal law

Having celebrated its 70th birthday last year, the impressively durable Landlord and Tenant Act 1954 (LTA) is now the subject of a thorough review of its current fitness for purpose.

Since 1954 (and the act’s last tweaking in 2003), the world has changed significantly to the point that there is a glut of almost every type of commercial premises. This could mean that the need for tenants to have an automatic right to renew their leases is diminished.

The Law Commission has published a consultation paper on possible reforms to the security of tenure provisions in the act which relates to lettings of business premises other than agricultural tenancies. The LTA gives business tenants a right to renew their tenancies on expiry of their existing ones, known as “security of tenure”, subject to a number of ‘grounds’ where a landlord can deny such a claim. Alternatively, landlords and tenants can agree before the beginning of a contract that their tenancy should be “contracted-out” of the act so that the tenant will not enjoy any security of tenure.

For many years the CLA has been lobbying that, if from the outset, a business lease was contracted-out of the LTA then any continuation of the tenancy after its expiry ought automatically to be contracted-out as well. This would save both landlords and tenants the trouble and expense of renewing such leases on expiry and they could be left to roll-on as a contracted-out periodic tenancy. In many cases landlords either overlook the need to renew such leases (and contract them out again) or fail to appreciate that by doing nothing the lease will convert from a contracted-out tenancy into a protected one by default.

The paper asks whether there is still a need for security of tenure. It proposes four possible models:

1. Mandatory security of tenure – that all business tenants should have security of tenure (as was the case between 1954 and 1970) and it would not be possible to contract-out of the act
2. No security of tenure – i.e. business tenants would have no right to a renewal tenancy
3. An opt-in scheme – security of tenure which the parties can choose to contract in to. If they did not do so, then the tenant would have no protection
4. An opt-out scheme – i.e. reflecting the current law

The Law Commission says that its position is neutral and it isn’t recommending any one model. It has indicated that it will need to see significant evidence before it will recommend a model that varies to the current one. Therefore, it is recommended that as many members as possible should respond to the consultation providing their comments.

The Law Commission is seeking feedback from all interested parties, be they landlords or tenants or professionals in this field, about what impact any changes would have to them. There is an online questionnaire/survey that is open to anyone to complete here.

The consultation also asks a number of questions. For example, if security of tenure is retained, does the scope of the current act capture the correct types and number of tenancies? Should the current types of tenancies that are excluded be reduced or decreased? Should the duration of short leases (currently no more than six months) that do not attract protection be increased and, if so, to how many years? Would it be beneficial (particularly for landlords) if all fixed term tenancies of, say, five years or less should automatically not attract security of tenure?

The consultation covers England and Wales and specifically asks whether there is any reason for the security of tenure regime to differ in Wales.

Members are welcome to complete the online consultation by 19 February 2025 below and share their thoughts and comments with CLA Senior Legal Adviser - roger.tetlow@cla.org.uk.